India has revved up plans to bolster its emergency crude buffer after recent geopolitical shocks exposed risks to oil supply routes.
State-owned Oil And Natural Gas Corporation (ONGC) has approved a 1.75-million-tonne strategic petroleum reserve at Mangaluru, adding nearly 13 million barrels of storage. ONGC said in a stock exchange filing that the project will be developed as a Phase-I extension of the Mangaluru strategic petroleum reserve, along with associated facilities.
The government also approved the second phase of the Strategic Petroleum Reserves (SPR) programme, which will add another 6.5 million tonnes of storage capacity. This includes a 4-million-tonne reserve at Chandikhol in Odisha and a 2.5-million-tonne expansion at Padur. Together with the existing 5.33-million-tonne capacity, the expansion is expected to raise India’s emergency crude coverage to more than 20 days of domestic consumption.
Commercial Viability
While ONGC did not disclose the new Mangaluru project cost or completion timeline, industry estimates peg the 1.75-million-tonne reserve at about $1.6 billion, or roughly ₹14,000-15,000 crore, including cavern development and crude filling costs.
ONGC’s board has also authorised the company to engage with the central government on expanding commercial utilisation of the facility, subject to regulatory support. The move is significant as India has been trying to make strategic reserves financially viable by allowing part commercial use while retaining emergency stockpiling capacity.
SPR programme was launched to maintain crude stockpiles that can be drawn down during supply disruptions or sharp spikes in global oil prices. These reserves are separate from operational inventories maintained by refiners and oil marketing companies.
In the first phase, India built underground rock caverns with a combined capacity of 5.33 million tonnes at Visakhapatnam in Andhra Pradesh, Mangaluru in Karnataka and Padur in Karnataka. The facilities are operated by Indian Strategic Petroleum Reserves Ltd, a special purpose vehicle under the Oil Industry Development Board.
The existing Mangaluru reserve has a capacity of 1.5 million tonnes. Mangalore Refinery and Petrochemicals, an ONGC subsidiary, has leased half of the existing Mangaluru facility, while the remaining capacity is leased to Abu Dhabi National Oil Company.
Global Energy Cooperations
India’s reserve strategy is also being linked with wider energy cooperation. During Prime Minister Narendra Modi’s visit to the UAE earlier this year, ADNOC announced plans to raise crude holdings in India’s strategic reserves to up to 30 million barrels. Under a separate agreement, India will explore potential crude storage at Fujairah as part of its strategic reserves, while the two sides also agreed to collaborate on LPG and LNG storage facilities in India.
According to petroleum ministry data cited by S&P Global, India’s SPRs currently provide coverage of about 9.5 days of net oil imports, while state-run oil companies hold crude and petroleum product storage equivalent to 64.5 days of net imports, taking total national storage capacity to about 74 days. International Energy Agency member countries are required to maintain oil stocks equivalent to at least 90 days of net imports.
Separately, the ministry of petroleum and natural gas has constituted a task force to assess India’s strategic reserves of crude oil, liquefied petroleum gas and natural gas, and recommend measures to expand storage capacity in view of rising geopolitical risks. The government has also directed oil marketing companies to maintain at least 30 days’ worth of LPG stocks to strengthen energy security.